Judge: Anne Richardson, Case: 24STCP00215, Date: 2024-09-24 Tentative Ruling

Case Number: 24STCP00215    Hearing Date: September 24, 2024    Dept: 40

Superior Court of California

County of Los Angeles

Department 40

I. Background

Petitioner Shareholder Representative Services LLC (Shareholder Services) is the Plaintiff in Shareholder Representative Services LLC v. Nestlé USA, Inc., et al., pending in the Court of Chancery of the State of Delaware (Delaware Action). In May 2023, Shareholder Services filed suit against Nestlé USA, Inc. and Honey Buyer LLC (Defendants) in the Delaware Action to recover payments that Shareholder Services argues the Defendants owe the former Securityholders of Freshly, Inc. (Freshly). Shareholder Services alleges that the Defendants’ obligations to make contracted-for accelerated earnout payments became due when Freshly’s founder and former CEO, Michael Wystrach, resigned from Freshly in October 2021. The case turns on resolving the question of whether Mr. Wystrach’s resignation from Freshly was voluntary or was coerced by Nestlé to avoid paying the earnout due to Shareholder Services if Mr. Wystrach was terminated.

Discovery in the Delaware Action revealed that in the months before and after Mr. Wystrach’s separation from Freshly, Nestlé arranged and paid for management-level coaching sessions for Mr. Wystrach and other Freshly and Nestlé executives with executive consulting firm Spencer/Shenk/Capers & Associates, Inc (Respondent).

Shareholder Services issued a subpoena to Respondent on October 30, 2023.

On December 8, 2023, Respondent served its objections to the subpoena along with a production of documents.

On December 13, 2023, Shareholder Services raised several concerns regarding the responses and objections to the subpoena and corresponding document production. The parties corresponded back and forth but were unable to reach a resolution.

On January 19, 2024, Shareholder Services filed this petition to enforce the subpoena.

On September 11, 2024, Respondent filed an opposition.

On September 17, 2024, Shareholder Services replied.

II. Motion

A. Requests for Judicial Notice

Respondent’s request for judicial notice is DENIED because it is not relevant to the determination of this motion.  

B. Evidentiary Objections

Respondent objects to various portions of the Declaration of Kourtney Kinsel submitted in support of Shareholder Services petition.

Objection Nos. 1-23: OVERRULED 

C. Legal Standard

1.     Interstate and International Depositions and Discovery Act

Under Code of Civil Procedure section 2029.350, “if a party to a proceeding pending in a foreign jurisdiction retains an attorney licensed to practice in this state, who is an active member of the State Bar, and that attorney receives the original or a true and correct copy of a foreign subpoena, the attorney may issue a subpoena under this article.” “A subpoena issued under this article shall be personally served in compliance with the law of this state, including, without limitation, Section 1985.” (Code Civ. Proc. § 2029.400.)

“If a dispute arises relating to discovery under this article, any request for a protective order or to enforce, quash, or modify a subpoena, or for other relief may be filed in the superior court in the county in which discovery is to be conducted and, if so filed, shall comply with the applicable rules or statutes of this state.” (Code Civ. Proc. § 2029.600 subd. (a).)

2.     Motion to Compel Further Production

A motion to compel a further response is used when a party gives unsatisfactory answers or makes untenable objections to interrogatories, demands to produce, or requests for admission. (See Code Civ. Proc., § 2031.310, subd. (a); Sinaiko Healthcare Consulting, Inc. v. Pacific Healthcare Consultants (2007) 148 Cal.App.4th 390, 403.) 

To request further production, a movant must establish: (1) good cause for the production (Code Civ. Proc., § 2031.310, subd. (b)(1); Sinaiko, supra, at p. 403); and (2) that a further response is needed because (a) the responding party’s statement of compliance with the demand to produce is incomplete Code Civ. Proc., § 2031.310, subd. (a)(1)), (b) the responding party’s representation that it is unable to comply is inadequate, incomplete, or evasive (Code Civ. Proc., § 2031.310, subd. (a)(2)), (c) the responding party’s objection in the response is without merit or is too general (Code Civ. Proc., § 2031.310, subd. (a)(3); Catalina Island Yacht Club v. Superior Court (2015) 242 Cal.App.4th 1116, 1127), or (d) if the responding party objected to the production of ESI on the ground that it is not reasonably accessible the movant can show that the (i) ESI is reasonably accessible or (ii) there is good cause for production of the ESI regardless of its accessibility (Code Civ. Proc., § 2031.310, subd. (e)). 

D. Analysis

1.     Procedural Analysis

Shareholder Services moves under Code of Civil Procedure section 2029.600 to compel production of documents from Respondent pursuant to Petitioner’s Subpoena.

In opposition, Respondent makes various objections regarding the service of the October 30, 2023 subpoena and reissuance of the subpoena on January 11, 2024. However, Respondent does not deny that it accepted service of both documents. (Kinsel Decl. Ex. 3 p. 3 [email exchange in which Respondent’s counsel states she is accepting service of the 10/30/23 subpoena]; Ross Decl. Ex C [email exchange in which on January 23, 2024, Respondent’s counsel confirms service of the documents purportedly served on January 11, 2024 including the petition and reissued subpoena.] Thus, Respondent did accept service.

Respondent’s other procedural objections are unavailing, as Respondent does not allege that any of the purported procedural deficiencies prejudiced Respondent in any way.  

2.     Substantive Analysis

RPD No. 3 seeks “All Communications and/or Documents regarding this Action.”

Respondent objects on attorney-client privilege, trade secret privilege and attorney-work product grounds. (Sep. Statement p. 1)

RPD No. 4 seeks “All contracts or agreements between You on the one hand and Nestlé or Buyer on the other hand, including but not limited to any of Nestlé or Buyer’s Affiliates.”

Respondent objects on irrelevant, overbroad, attorney-client privilege, trade secret privilege and attorney-work product grounds. (Sep. Statement pp. 8-9)

RPD No 5 seeks “Documents sufficient to show any and all payments received by You from Nestlé or Buyer, including but not limited to any of Nestlé or Buyer’s Affiliates, since January 1, 2020.”

Respondent objects on irrelevant, overbroad, attorney-client privilege, trade secret privilege and attorney-work product grounds (Sep. Statement pp. 16-17)

Petitioner has clarified that it is not seeking any internal SSCA attorney-client privileged documents and presumably the same would apply to work product. The discovery requests are not overbroad insofar as Shareholder Services has requested discovery as to Nestlé and Buyer and Buyer’s Affiliates and the requests are reasonably particularized

The trade secret, attorney-client privilege, and attorney work product objections may be viable, but need to be supported by a privilege log. A nonparty that objects to a request for document production based on a claim of privilege must support that claim with “sufficient factual information for other parties to evaluate the merits of that claim, including, if necessary, a privilege log.” (Code Civ. Proc. § 2031.240 subd. (c)(1); see also Wellpoint Health Networks, Inc. v. Super. Ct., (1997) 59 Cal. App. 4^th 110, 129 [“The information in the privilege log must be sufficiently specific to allow a determination of whether each withheld document is or is not in fact privileged.”].) Moreover, the parties may enter into a protective order here in California under which the documents may also be produced, if Respondents object to the use of the Delaware protective order.

Based on the above, Shareholder Services’ petition to enforce the subpoena is GRANTED.

Shareholder Services’ motion to compel production of documents is GRANTED The Court also notes that Respondent must support its privilege objections with a privilege log.

III. Conclusion

Petitioner Shareholder Representative Services, LLC’s Petition to Enforce Subpoena is GRANTED.

Petitioner Shareholder Representative Services, LLC Motion to Compel is GRANTED as set forth above. 

Respondent Spencer/Shenk/Capers & Associates, Inc. is ordered to provide further responses within 30 days of this ruling.